Here’s what happens to your student loan if the Department of Education disappears

Continuing its adherence to the tech industry’s motto of “move fast and break things,” the current administration has recently put the U.S. Department of Education (DoE) on the chopping block. This 46-year-old institution (yes, it really is younger than the original Star Wars) oversees federal education policy, ensures equal access to education, and administers the federal student loan program.

As a recovering high school English teacher, I would argue that all of the DoE’s responsibilities are vital to our nation and shouldn’t be part of the Taxes Chainsaw Massacre. And I’m glad our executive branch cannot dismantle the Department of Education without Congressional approval. But that doesn’t change the fact that the Secretary of Education has slashed the DoE workforce, and the president has floated the idea of moving student loan responsibilities to a different department, like the Small Business Administration (SBA).

So, where does the proposed dismantling of the Department of Education leave federal student loan borrowers? Borrowers are subject to the legal loan contracts they signed with the DoE. This means the potential chaos could cause some localized chaos in the vicinity of your bank account.

To help borrowers understand what to expect and how to protect themselves while the dust settles around the DoE, I spoke to student loan experts Kat Tretina and Mark Kantrowitz. Here’s what you need to know.

The SBA probably won’t take over your student loans

Although the president has been treating all government agencies as if they can be changed on a whim, it isn’t that simple. If you remember your more obscure Schoolhouse Rock songs, you’ll recall that we have a three-ring government and “no one part can be more powerful than any other is.”

In this situation, “ changing the location of the current federal student loan program, creating a new program, or even resurrecting an old guaranteed loan program, would require an act of Congress,” Kantrowitz says.

That’s because the Higher Education Act of 1965 “ mandates that all federal student aid programs are located and managed by Federal Student Aid (FSA),” Kantrowitz says. “It’s right there in the statute. They can’t really interpret the law as ‘the secretary of Education can delegate the authority to the Small Business Administration.’”

If the current administration decides to try it anyway, they would have to flout the law and face lawsuits to dismantle the DoE and move your student loans to another agency. This may be cold comfort, considering how little lawsuits seem to phase the president. But Kantrowitz offers some logistical comfort, as well: “Keep in mind that the SBA is cutting something like 43% of its staff,” he says. “So, how are they gonna do all this new federal loan stuff with fewer staff? Let alone what they currently do? It’s a recipe for chaos.”

You may struggle to get personalized answers about your loans

Even though your loans are likely to stay right where they are, you may still experience some turbulence during repayment. Specifically, the DoE layoffs means the department has lost years of institutional knowledge as well as the necessary labor force to maintain the FSA website and provide call center support.

These mass firings may affect borrowers sooner rather than later. Tretina, who has been reporting on student loans for nine years, stated on March 12, 2025, that “all of my contacts with the Department of Education were laid off, and getting a hold of anyone for information about the latest changes is near impossible.”

Kantrowitz does offer a recommendation for how current borrowers can get the answers they need in the wake of this DoE reduction in force: Make friends with your student loan servicer.

Federal student loans are serviced by contractor organizations that manage loan repayment. While the DoE owns your federal student loan, a separate loan servicer is the organization you deal with directly when making payments, requesting forbearance or deferment, or changing your repayment plan. Loan servicers have to keep up-to-date with DoE changes and can typically answer questions about your specific loan situation.

But there are other calls you can make if you’re confused about your loans and can’t reach the DoE.  ”Your college financial aid administrator is a good source of information,” Kantrowitz says. “Even if you’ve already graduated and you are repaying your loans, they can still provide you with useful information.” This is also true for any borrowers who are repaying loans but didn’t finish their degree.

Get organized to keep the chaos at bay

Any changes to federal student loans will only affect new borrowers. Current borrowers can count on their loan agreements remaining the same as they were when they signed them. But very few of us can recite the specifics of the loan agreements they signed in college—which is why you should protect yourself by hunting down those documents and keeping them handy.

To be clear, it is exceedingly unlikely that the U.S. government will start playing a shell game with your current federal student loan. Locating, downloading, and printing out your loan agreement is a way to protect yourself from misinformation or misunderstandings about your loan.

Here’s how: If you have your documents available, they can provide you with a starting point for understanding how a proposed change might affect you. If you don’t have your loan agreement and an understanding of your borrower rights and responsibilities, it’s a lot easier to panic if you hear a rumor that the WWE is now in charge of the DoE.

That said, Tretina also recommends keeping hard copies of your payments, just in case. “If you have student loans, download all of your statements, particularly records of past payments,” she says. Having these records will ensure you get credit for all of your payments, even if the overworked remaining DoE employees make an “oopsie” or experience an IT glitch.

Be the order you want to see in the world

It’s easy to feel overwhelmed by the chaotic news cycle, especially when it starts affecting things that were already overwhelming, like student loans. In addition to breathing into a paper bag, you can help calm your concerns by remembering that moving your student loans to another agency would require an Act of Congress.

While the recent staff cuts at the DoE may make it difficult to get personalized answers about your loans, you can always reach out to your loan servicer or your alma mater’s financial aid office for assistance. And downloading and printing copies of your loan agreement and statements will help protect you from both misinformation and potential mistakes.